Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning August 18

 

Asset Class	Weekly Level / Change	Implications for S&P 500	Implications for Nifty*
S&P 500	6450, 0.94%	Bullish	Bullish
Nifty	24631, 1.10%	Neutral **	Bullish
China Shanghai Index	3697, 1.70%	Bullish	Bullish
Gold	3383, -2.11%	Bearish	Bearish
WTIC Crude	61.98, -2.30%	Bearish	Bearish
Copper	4.49, 0.65%	Bullish	Bullish
CRB Index	296, 0.50%	Bullish	Bullish
Baltic Dry Index	2044, -0.34%	Neutral	Neutral
Euro	1.1698, 0.43%	Neutral	Neutral
Dollar/Yen	147.20, -0.31%	Neutral	Neutral
Dow Transports	15662, 2.10%	Bullish	Bullish
Corporate Bonds (ETF)	109.74, 0.30%	Neutral	Neutral
High-Yield Bonds (ETF)	96.92, 0.21%	Neutral	Neutral
US 10-year Bond Yield	4.33%, 1.05%	Bearish	Bearish
NYSE Summation Index	540, 2%	Bullish	Neutral
US Vix	15.09, -0.40%	Neutral	Neutral
S&P 500 Skew	154	Bearish	Neutral
CNN Fear & Greed Index	Greed	Bearish	Neutral
Nifty MMI Index	Extreme Fear	Neutral	Bullish
20 DMA, S&P 500	6367, Above	Bullish	Neutral
50 DMA, S&P 500	6228, Above	Bullish	Neutral
200 DMA, S&P 500	5929, Above	Bullish	Neutral
20 DMA, Nifty	24757, Below	Neutral	Bearish
50 DMA, Nifty	25021, Below	Neutral	Bearish
200 DMA, Nifty	24051, Above	Neutral	Bullish
S&P 500 P/E	29.88	Bearish	Neutral
Nifty P/E	21.66	Neutral	Bearish
India Vix	12.36, 2.68%	Neutral	Bearish
Dollar/Rupee	87.51, 0.03%	Neutral	Neutral
Overall	S&P 500	Nifty
Bullish Indications	9	8
Bearish Indications	6	7
Outlook	Bullish	Bullish
Observation	The S&P and the Nifty rose last week. Indicators are bullish for the week. Markets are topping again. Watch those stops.
On the Horizon	UK – CPI, Eurozone – CPI, German GDP, US - Jackson Hole symposium
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Data courtesy stockcharts.com, investing.com, multpl.com, nseindia.com, tickertape.in
**Neutral	Changes less than 0.5% are considered neutral

 

The S&P and the Nifty rallied last week. Indicators are bullish for the week. Markets are topping. We are transitioning into a deflationary regime. The sentiment is greedy. Carry trade liquidation is about to resume, and the S&P will likely find resistance soon. The macro-environment was rapidly deteriorating even before the recent tariff issue. The recent massive breakdown in transports (subsequent non-conformation) is quite ominous. This, combined with the oil's free fall, has profound recessionary implications. The Nifty has corrected significantly from recent highs and will likely underperform going forward.

The past week saw US equity markets rise. Most emerging markets rose even as interest rates rose. Transports rose. The Baltic Dry Index was unchanged. The dollar fell. Commodities were unchanged. Valuations are expensive, market breadth rose, and the sentiment is greedy. Volatility (S&P 500) was unchanged.

A currency crisis should resume at any moment and push risky assets to new lows. Deflation is in the air, and bonds are telegraphing just that despite intermittent spikes in yields. It feels like a 2008-style recession trade has begun, with a potential for a decline in risk assets across the board. The current market is tracking closely the 2000 moves down in the S&P 500, implying a panic low right ahead in the upcoming months (My views do not matter; kindly pay attention to the levels). A dollar rally is a likely catalyst.

The S&P 500 is correcting from recent highs. We have bounced from recent lows without capitulation. This suggests the lows may not be in, and the regime has changed from buying the dip to selling the rip. We may get a final flush down soon. Risky assets should continue breaking to the downside as earnings growth falters. The Fed has aggressively tightened into a recession. Deflationary busts often begin after major inflationary scares. The Dollar is at major lows, while commodities and bond yields are flashing significant warning signs.

Global yield curves have inverted a second time after the recent steepening, reflecting the arrival of a significant economic slowdown. Following the recent steepening of the yield curve after the first inversion, this second inversion is complete, and currently, steepening, which is a precursor to the next recession, and the riskiest assets will underperform going forward under such conditions. 

The critical levels to watch for the week are 6465 (up) and 6435 (down) on the S&P 500 and 24700 (up) and 24550 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets.  High beta / P/E will get torched again and is a sell on every rise. Gold increasingly looks like the asset class to own over the next decade (currently correcting). Gold exploded almost eight times higher over the decade following the dot-com bust in 2000. Imagine what would happen to gold as this AI bubble bursts. You can check out last week’s report for a comparison. I love your thoughts and feedback.

 

 

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning August 11

 

Asset Class	Weekly Level / Change	Implications for S&P 500	Implications for Nifty*
S&P 500	6390, 2.43%	Bullish	Bullish
Nifty	24363, -0.82%	Neutral **	Bearish
China Shanghai Index	3635, 2.11%	Bullish	Bullish
Gold	3491, 2.23%	Bullish	Bullish
WTIC Crude	63.88, -4.61%	Bearish	Bearish
Copper	4.47, 0.45%	Neutral	Neutral
CRB Index	294, -0.41%	Neutral	Neutral
Baltic Dry Index	2051, 1.64%	Bullish	Bullish
Euro	1.1640, 0.45%	Neutral	Neutral
Dollar/Yen	147.73, 0.26%	Neutral	Neutral
Dow Transports	15340, 1.56%	Bullish	Bullish
Corporate Bonds (ETF)	109.41, -0.20%	Neutral	Neutral
High-Yield Bonds (ETF)	96.72, 0.38%	Neutral	Neutral
US 10-year Bond Yield	4.28%, 1.49%	Bearish	Bearish
NYSE Summation Index	531, -17%	Bearish	Neutral
US Vix	15.15, -25.66%	Bullish	Bullish
S&P 500 Skew	148	Bearish	Neutral
CNN Fear & Greed Index	Neutral	Neutral	Neutral
Nifty MMI Index	Extreme Fear	Neutral	Bullish
20 DMA, S&P 500	6325, Above	Bullish	Neutral
50 DMA, S&P 500	6178, Above	Bullish	Neutral
200 DMA, S&P 500	5913, Above	Bullish	Neutral
20 DMA, Nifty	24872, Below	Neutral	Bearish
50 DMA, Nifty	25027, Below	Neutral	Bearish
200 DMA, Nifty	24052, Above	Neutral	Bullish
S&P 500 P/E	29.58	Bearish	Neutral
Nifty P/E	21.48	Neutral	Bearish
India Vix	12.03, 0.48%	Neutral	Neutral
Dollar/Rupee	87.49, 0.28%	Neutral	Neutral
Overall	S&P 500	Nifty
Bullish Indications	9	8
Bearish Indications	5	6
Outlook	Bullish	Bullish
Observation	The S&P rose and the Nifty fell last week. Indicators are bullish for the week. Markets are topping again. Watch those stops.
On the Horizon	UK – GDP, Eurozone – CPI, US – CPI, PPI, Japan - GDP
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Data courtesy stockcharts.com, investing.com, multpl.com, nseindia.com, tickertape.in
**Neutral	Changes less than 0.5% are considered neutral

 

The S&P was up, and the Nifty fell last week. Indicators are bullish for the week. Markets are topping. We are transitioning into a deflationary regime. The sentiment is neutral. Carry trade liquidation is about to resume, and the S&P will likely find resistance soon. The macro-environment was rapidly deteriorating even before the recent tariff issue. The recent massive breakdown in transports (subsequent non-conformation) is quite ominous. This, combined with the oil's free fall, has profound recessionary implications. The Nifty has corrected significantly from recent highs and will likely end its outperformance soon.

The past week saw US equity markets rise. Most emerging markets rose even as interest rates rose. Transports rebounded. The Baltic Dry Index rose. The dollar fell. Commodities were unchanged. Valuations are expensive, market breadth fell, and the sentiment is neutral. Volatility (S&P 500) fell.

A currency crisis should resume at any moment and push risky assets to new lows. Deflation is in the air, and bonds are telegraphing just that despite intermittent spikes in yields. It feels like a 2008-style recession trade has begun, with a potential for a decline in risk assets across the board. The current market is tracking closely the 2000 moves down in the S&P 500, implying a panic low right ahead in the upcoming months (My views do not matter; kindly pay attention to the levels). A dollar rally is a likely catalyst.

The S&P 500 is correcting from recent highs. We have bounced from recent lows without capitulation. This suggests the lows may not be in, and the regime has changed from buying the dip to selling the rip. We may get a final flush down soon. Risky assets should continue breaking to the downside as earnings growth falters. The Fed has aggressively tightened into a recession. Deflationary busts often begin after major inflationary scares. The Dollar is at major lows, while commodities and bond yields are flashing significant warning signs.

Global yield curves have inverted a second time after the recent steepening, reflecting the arrival of a significant economic slowdown. Following the recent steepening of the yield curve after the first inversion, this second inversion is complete, and currently, steepening, which is a precursor to the next recession, and the riskiest assets will underperform going forward under such conditions. 

The critical levels to watch for the week are 6400 (up) and 6380 (down) on the S&P 500 and 24450 (up) and 24300 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets.  High beta / P/E will get torched again and is a sell on every rise. Gold increasingly looks like the asset class to own over the next decade (currently correcting). Gold exploded almost eight times higher over the decade following the dot-com bust in 2000. Imagine what would happen to gold as this AI bubble bursts. You can check out last week’s report for a comparison. I love your thoughts and feedback.